Guarantor Loans: How to Decide Whom Your Guarantor Should Be
We all need a little help sometimes, and our finances are no different in this respect to any other aspect of our lives. Big dreams can require a lot of capital to fund, and it’s not always prudent or practical to delay these ideas until you have sufficient money in the bank.
This is where personal loans come in handy. For those who use them properly, they’re a fantastic tool for fast-tracking your financial situation to a more lucrative state, and guarantor loans are one of the most economical and low risk options available to you.
But how to choose a guarantor? Here is some sage advice to help guide your selection…
#1: A Strong Credit History
The only people that will be eligible to act as your guarantor are those that have a positive credit history. This means that there is little point in you approaching friends or family members that you know have suffered financial misfortunes, even if they have a bulging bank account at present. Even those who have never borrowed or have become indebted themselves may not be eligible if they haven’t taken the time to build a credit history, so be sure to request that they get a credit check before approaching any lenders.
#2: A Secure Financial Situation
Even those who have a positive credit record may not always have money to spare, and it’s important to check that your guarantor is financially secure before they sign on the dotted line. If you should default on your repayments, leaving them liable, will they have enough money in the bank to cover your debt without leaving themselves short? If the answer is ‘no’, then common decency suggests that you ought to find someone else.
#3: A Willingness to Help
Thirdly and finally, make sure that anyone you accept is willing to help you if you can’t meet repayments yourself. Family members and friends can often feel obliged to come to your aid, but if things go wrong, it can lead to a lot of bad feeling between the two parties. Unless they’re adamant that they’re happy to assist you and won’t be leaving themselves short, it may be a better idea to look for someone else, or explore alternative borrowing options. After all, losing a sibling, or falling out with friends, is too high a price to pay for a little more money in your bank.
Choose the right guarantor today with these three top tips.